Even as large hospitals in India rapidly consolidate, smaller corporate chains are aggressively expanding with an aim to grow into regional leaders — which, experts say, in turn, could position them as buyout targets for the big players.
The mid-tier chains are betting on greenfield opportunities and expansion of existing hospitals buoyed by internal accruals and debt, increasing demand for private healthcare, and growing insurance penetration. In some instances, expensive and complicated buyouts are part of the strategy.
India’s private hospital sector is largely unorganized, with large swathes in tier-I as well as tier-II and tier-III cities under-penetrated by organized corporate chains. “The top 20 organized players have less than 15% share of the healthcare delivery market, indicating significant headroom for regional players to expand,” Ram Panda, managing director of healthcare and life sciences at consultancy Alvarez & Marsal India, told Mint.
Here's a summary of the expansion afoot at different mid-tier corporate hospital chains:
- Jupiter Life Line Hospitals is expanding its presence in Maharashtra in Pune and Thane cities. It plans to add around 1,440 beds in the next three to four years, taking its total capacity to 2,500. The firm has planned a total capex of ₹1,400 crore, it outlined in its Q2FY26 investor presentation.
- IPO-bound Paras Hospitals, headquartered in Gurugram, is increasing its presence in tier-II and tier-III cities in north India with new units planned in Gurgaon, Ludhiana and Panchkula.
- Telangana's KIMS, as Krishna Institute of Medical Sciences is better known, is expanding with a recent 300-bed hospital in Thane and a 450-bed hospital in Bengaluru. The chain has announced a bed ramp-up of over 1,600 beds with an approximate capex of ₹1,060 crore in new and existing facilities, according to its latest investor presentation in November.
These come trailing other expansion announced in the last two years:
- Artemis Hospitals has increased capacity at Gurgaon to 700 beds, announced plans for a 300 bed-super specialty hospital in Raipur and a 550-bedder in south Delhi.
- Tamil Nadu chain Kauvery Hospitals has indicated plans to add 3,500 beds across south India spending ₹3,000 crore on capex.
And, those taking the mergers and acquisitions (M&As) route are:
- New Delhi-headquartered Ujala Cygnus which in April acquired a stake in Punjab hospital chain Amandeep Hospitals, for an undisclosed sum, increasing its bed capacity from 2,000 to 2,800 beds.
- Chennai's MGM Healthcare that is expanding its footprint in south India with acquisitions of Visakhapatnam's SevenHills Hospital and crosstown hospital Fortis Malar in 2024.
Private healthcare in India has traditionally been a regional play with brands and models in specific geographies. Mid-tier hospital chains are strengthening their existing presence and expanding concentrically beyond these, experts said.
Healthcare grossly under-serviced
This comes as top chains such Apollo Hospitals, Manipal Hospitals, and Max Healthcare are also undertaking aggressive expansion in a bid to become pan-India players. Apollo is investing ₹8,000 crore over the next four years to add 4,300 beds in Pune, Kolkata, Hyderabad and Bengaluru.
The sector has also drawn the interest of investors with high value investments and M&As underway. In the last quarter alone, the hospitals sector saw 19 deals worth $264 million, according to a report by Grant Thornton Bharat, another consultancy.
Temasek-backed Manipal recently acquired Pune-based Sahyadri Hospitals for about ₹6,000 crore, strengthening its hold in western India. Kerala-based Aster DM’s merger with Blackstone-backed Quality Care India a year ago established the merged entity as one of top three chains in India with over 10,000 beds.
The smaller among regional chains are mainly expanding organically, funded by internal accruals and debt. However, regional players have also been actively evaluating fundraises, said Panda.
“The critical thing is, healthcare access is still minimal in the country. And healthcare is a very local or regional play, due to which, the real availability of healthcare, even if you look at cities like Mumbai or Delhi, there's so much [room] to expand,” Mayur Sirdesai, partner at private equity firm Somerset Indus Capital Partners told Mint.
Driven by rising per capita incomes and increasing insurance penetration, Sirdesai added, there is more focus on inpatient and outpatient healthcare and demand for better treatments. Different models will evolve as players try to build a profitable business tailoring it to a region’s payer mix, disease burden, and competition, among other factors.
Familiarity breeds comfort
Chains such as Jupiter and Paras prefer to stick to existing regions where the market is known. “We already have a presence and strength in the west. We would like to focus and concentrate more on one geography rather than scattering our resources far and wide,” said Dr Ankit Thakker, joint managing director and CEO at Jupiter.
“The concentration of geography will expand in concentric circles. We will slowly widen the geography of the net as we go along,” he added.
Paras sees an untapped market in tier-II and tier-III cities in North India. Tier 1 cities have more and more small to big multi-speciality hospitals. "…when it comes to Tier II [cities], people are forced beyond the government medical colleges in whichever shape and form to come to Tier I cities for health treatments. This is why we want to venture into Tier II,” noted group COO Vineet Aggarwal.
These chains, however, are wary of acquisitions. Thakker of Jupiter outlined it as a toss-up between time on the one side and building to fit the model right. “In a greenfield model, the only compromise I have to make is speed. I have to wait for three years longer,” he said. Acquiring an asset risks compromising on location, design, technology, and people.
Dr Ramesh Kancharla, chairman and MD of Hyderabad-based Rainbow Children’s Hospital, had a nuanced view: finding an asset that fits well may be tough but it can power inorganic growth. In August, Rainbow announced the acquisition of Guwahati-based Pratiksha Hospital, marking its entry into the northeast. “If there are such children's hospitals, of course, we would definitely be looking at it,” said Dr Kancharla, as his chain eyes Delhi-NCR and Northeast, beyond its South India stronghold.
Stage set consolidation
The expansion among the mid-tier private hospital chains could offer plum pickings for large, national players expanding their pan-India presence, an expert said.
“Today, even the mid-level chains are seeing expansion potential. So they will expand. At some point, they could be bought over by a [larger chain],” said Sirdesai. “It's easier to acquire a model which is existing in those markets, because its a very different model from what they do.”
Further, as the mid-tier chains scale up, there will be increasing private equity and strategic interest in them, said Panda of Alvarez & Marsal.